Pareto phenomenon ABC analysis Classifying items activities or

Pareto phenomenon (ABC analysis) Classifying items, activities, or tasks according to some Ø measure of importance and allocating efforts and resources accordingly Ø A vital few things are important for reaching an objective or solving a problem Ø 80/20 rule – 80% of the problems are caused by 20% of the activities How do we identify the vital few?

Pareto phenomenon, ABC analysis, & Recognition of Priorities Acknowledging the fact that certain aspects of any management situation are more important than others is called Recognition of Priorities.

Models n A model is an abstraction of reality n n n Physical Schematic Mathematical

Quantitative approach n n n Linear programming Transportation model Inventory models Waiting line models Statistical models

Recent Trends v Global Competition v Operations Strategy v Flexibility v Cycle Time Reduction v Business Process Re-engineering v Supply Chain Management v Workers Involvement v Lean Manufacturing v Total Quality Management

Recent Trends ü Global Competition ü ü ü Operations Strategy ü ü ü Quality based Time based Flexibility ü ü ü Global Market Global Suppliers Variety of products High Volume as well as Low Volume Cycle Time Reduction ü The less time RM (Raw Material), WIP (Work In Process), FG (Finished Goods) spend in the Manufacturing and Logistics process, the less opportunity they have to absorb costs.

Recent Trends ü Business Process Re-engineering ü ü Supply Chain Management ü ü ü Workers are not costs, they are assets Lean Manufacturing ü ü NOT from RM storage to FG warehouse From the original suppliers to final consumers Workers Involvement ü ü Value added and NVA activities Inventory is waste Total Quality Management

Examples of Exam Questions 1. The following activities are all a part of system operations as opposed to system design a) b) c) d) e) long term forecasting, product design, capacity planning, inventory management. short term forecasting, product design, capacity planning, inventory management short term forecasting, production planning, quality assurance, inventory management none of the above 2. Pareto Phenomenon is the same as a) b) c) d) e) ABC analysis of trade-off systems analysis quantitative approaches none of the above

Review Questions (cont. ) 3. In ABC analysis a) b) c) d) e) 25% of items form 25% of the measure of importance 10% of items form 10% of the measure of importance 90% of items form 90% of the measure of importance 50% of items form 50% of the measure of importance 15% of items form 75% of the measure of importance 4. Given (I) Lean operations, (II) Operations strategy, (III) Business process re-engineering (A) Inventory is waste, (B) Time based operations, (C) High Volume as well as Low Volume, (D) Value-added and NVA activities Which of the following selections is correct? a) b) c) d) e) (I) (I) (I) matches with (D), (II) matches with (C), (III) matches with (B) matches with (A), (II) matches with (B), (III) matches with (C) matches with (A), (II) matches with (B), (III) matches with (D) matches with (A), (II) matches with (D), (III) matches with (C), (II) matches with (D), (III) matches with (B)

Review Questions (cont. ) 5. Given (I) supply chain management, (II) Flexibility, (III) Operations strategy (A) Quality based operations, (B) Workers are asset, (C) Value added and NVA activities, (D) from suppliers to consumers, (E) High Volume as well as low volume Which of the following selections is correct? a) b) c) d) e) (I) matches with (D), (II) matches with (E), (III) matches with (C) (I) matches with (D), (II) matches with (E), (III) matches with (A) (I) matches with (A), (II) matches with (E), (III) matches with (D) (I) matches with (C), (II) matches with (D), (III) matches with (E) (I) matches with (E), (II) matches with (B), (III) matches with (D)